UNGA FIFTH COMMITTEE: US ACHIEVES OBJECTIVES IN

C O N F I D E N T I A L USUN NEW YORK 000005

SIPDIS

E.O. 12958: DECL: 01/03/2020
TAGS: AORC PREL UN UNGA UNGA KUNR
SUBJECT: UNGA FIFTH COMMITTEE: US ACHIEVES OBJECTIVES IN
SCALES OF ASSESSMENTS

REF: A. 09USUNNEWYORK518

B. 09USUNNEWYORK562

C. 09USUNNEWYORK655

D. 09USUNNEWYORK663

E. 09USUNNEWYORK746

F. 09USUNNEWYORK843

G. 09USUNNEWYORK917

H. 09USUNNEWYORK1071

I. 09USUNNEWYORK1122


1. (U) Summary: Shortly before midnight on 23 December 2009,
Permanent Representatives from approximately two dozen UN
Member States concluded nine hours of negotiations to resolve
the impasse over the scales of assessments in the Fifth
(Administrative and Budgetary) Committee. The meeting, which
was chaired by the President of the General Assembly (PGA),
was convened because of deadlock in the Fifth Committee
stemming from differences between developed countries and the
G-77. Although the Committee ultimately agreed to maintain
the current methodologies for the two scales, concessions
were made on both scales. On the regular budget scale, the
Committee agreed to a review of the scale methodology by the
end of the sixty-sixth session in 2012. On the peacekeeping
scale, there was an understanding that the Bahamas and
Bahrain would remain in level B but would be treated as if
they were in level C until 2012. In the end, the U.S.
achieved its primary objectives of maintaining the 22-percent
ceiling in the regular budget scale and preventing expansion
of level C in the PKO scale without breaking with the EU and
other Western allies. End Summary.

SETTING THE SCENE
--------------


2. (C) U.S. JOINS G7 AND EU TO SEEK FAIRER SCALES OF
ASSESSMENTS: Beginning in April, Fifth Committee experts of
the G7 (Canada, France, Germany, Italy, Japan, the UK, and
the U.S.),joined later by the EU, held a number of meetings
to forge a common negotiating position on the scales of
assessments. On the regular budget scale, this "like-minded"
group agreed to pursue a change to the low per capita income
adjustment (LPCIA) element of the methodology to increase the
share of the BRIC countries (Brazil, Russia, India, and
China) while respecting each others' redlines, e.g. the U.S.
redline of maintaining the 22 percent ceiling. On the PKO
scale, the group agreed to work towards elimination of the
discount applied to the five countries in level C, i.e.
Brunei, Kuwait, Qatar, Singapore, and the UAE, while
recognizing that taking such a position might have negative
repercussions on the regular budget scale negotiations (see
refs. A-F).


3. (U) FIFTH COMMITTEE BEGINS DEBATE ON SCALES: The Fifth
Committee began its deliberations with formal statements 5
and 6 October during which G-77 representatives declared that
they were prepared to immediately adopt the existing
methodology for the regular budget scale (see ref. G). The
Fifth Committee held informal consultations until 19 October,
when it turned its attention to other items on the agenda. On
20 November, the Committee resumed its discussion on scales
with the presentation of proposals on the two scales
resolutions during informal consultations.


4. (U) G-77 PROPOSES TO LIFT CEILING WHILE LIKE-MINDED GROUP
ATTACKS THE BRIC: On the regular budget scale, the G-77
proposed to restore the ceiling to 25 percent because (1) the
ceiling represented "a fundamental source of distortion" in
the scale methodology and (2) the continued failure of the
U.S. to fulfill its promise, made in 2000 when the ceiling
was lowered to 22 percent, to satisfy its financial
obligations to the UN. The EU, represented by Sweden, France,
and Romania, proposed a reduction of the LPCIA discount for
the BRIC and redistribution of the savings resulting from
this reduction between developed and developing countries.
Russia proposed relaxing the criteria for applying
price-adjusted rates of exchange in lieu of market exchange
rates. Mexico and Tajikistan also presented proposals, but
these generated very little discussion in the Committee (see
ref. H).



5. (U) PKO SCALE PROPOSALS FOCUS ON LEVEL C: On the PKO
scale, the G-77 proposed inclusion of the Bahamas and
Bahrain, which had graduated into level B in 2004 from levels
D and E respectively, into level C and establishment of level
C as the highest assessment level for developing countries.
The U.S. put forth two options (1) to eliminate level C
outright or (2) to maintain the status quo regarding level C,
while initially indicating a strong preference for the former
(see ref. H).


6. (U) IMPASSE IN THE FIFTH COMMITTEE: By the beginning of
December, it was clear that both sets of negotiations were
deadlocked. While the like-minded group, led by the EU,
vigorously pursued LPCIA redistribution on the regular
budget, the G-77 not only steadfastly opposed the proposal,
saying that it was both arbitrary and discriminatory, but
also accused the EU of trying to bribe G-77 members into
breaking solidarity. The G-77 also continued to attack the
ceiling, claiming that the ceiling -- and not the LPCIA --
was the largest source of distortion in the scale
methodology. While the U.S. and others argued that the
Organization has always had a ceiling to prevent its
overreliance upon any one Member State, the G-77 responded
that a ceiling of 25 percent would still serve that purpose
(see ref. I). On the PKO scale, the G-77 proposal was opposed
by the like-minded group, which engaged the G-77 in many
heated discussions primarily over the definition of
"developing country". In an effort to reach out to the G-77,
the U.S. proposed to maintain the status quo while the
General Assembly conducted a review of the structure of
levels. While the G-77 was generally receptive to the U.S.
proposal, it continued to insist on the inclusion of the
Bahamas and Bahrain in level C.


7. (C) TENSIONS RISE WITHIN THE LIKE-MINDED GROUP: As the
Fifth Committee deliberations progressed, the like-minded
group -- which expanded to include the Republic of Korea and
Mexico -- continued holding expert-level consultations.
Within the group, it was apparent that, despite a concerted
demarche campaign, the LPCIA redistribution proposal failed
to gain any traction amongst G-77 members. The U.S. and other
members of the group expressed concern that the group risked
losing control over the issue if it continued to pursue the
EU proposal on LPCIA and therefore urged the EU to be
flexible and consider more realistic proposals for the
endgame. The U.S. also warned that such flexibility was
necessary to ensure that its key interest -- the ceiling --
was adequately protected. The unity of the group was
maintained when the EU agreed to consider a "status quo plus"
option for the endgame. On 17 December, the group drafted a
proposal to maintain the current methodology of the regular
budget scale while calling for a review of the methodology
with a view towards a decision on a new scale of assessments
in two years. This proposal was submitted privately to the
Chairman of the Fifth Committee, Ambassador Peter Maurer of
Switzerland, the next morning.


8. (C) CHAIRMAN ATTEMPTS TO BROKER COMPROMISE: In an attempt
to broker a compromise on the two scales, the coordinators of
the regular budget and PKO scales discussions circulated
draft proposals on 20 December that would maintain the
current methodologies of the scales for the period 2010-2012
while calling for comprehensive reviews of the scale
methodologies in the interim. These proposals were based on
the language privately submitted to the Chairman by the
like-minded group but included amendments made by the
Chairman to better take into account the positions of other
delegations. However, the G-77, Russia, and Tajikistan
rejected the proposal as not going far enough to address
their concerns. The EU also raised concerns and said that
they would have to discuss the proposal internally. In
private, EU negotiators told USUN that they were unhappy with
the Chairman's amendments.

HIGH-LEVEL MEETINGS CONVENED TO RESOLVE DEADLOCK
-------------- ---


9. (U) G-77 SNUBS PGA AT HIGH-LEVEL MEETING: On 22 December,
over two weeks after the Committee was originally scheduled
to complete its work, the PGA, Ali Treki of Libya, intervened


at the request of the Chairman to resolve the impasse. That
afternoon, the PGA called for a meeting at the Permanent
Representative (PR) level of the delegations that had
submitted proposals on the scales in the Fifth Committee in
order to try to break the deadlock. However, PRs from the
G-77 refused to attend the meeting, reiterating their
longstanding position concerning decision-making in
"small-group configurations". By this time, however, it was
widely recognized that the scales could no longer be
negotiated at the Fifth Committee expert level. The PGA met
separately that evening with G-77 PRs to express his
displeasure at their boycott and subsequently called for a
second PR-level meeting for 23 December, involving a broader
range of Member States, in order to reach a compromise.


10. (U) PERM REPS CONVENE TO DELIBERATE ON SCALES: At 3:00 in
the afternoon on 23 December, two dozen PRs and DPRs took
their places around the ring-shaped table in Conference Room
8 in the basement of the General Assembly building. The rest
of the chamber was packed with Fifth Committee experts, with
even more waiting outside. At one point during the
negotiations on the regular budget scale, the PGA, expressing
frustration that PRs could not engage in fruitful discussion
in the presence of Fifth Committee experts, threw everyone
who did not hold ambassadorial rank out of the room. The two
scales were then discussed ad seriatum, starting with
negotiations on the regular budget scale.


11. (U) REGULAR BUDGET SCALE: PERM REPS AGREE ON "STATUS QUO
PLUS": Discussion at the PR meeting focused on a draft
proposal presented by the Chairman on 22 December that
further refined the compromise proposals circulated on 20
December to take into account the concerns raised. All
delegations agreed to a "status quo plus" option, though the
G-77 called for deletion of the "plus" paragraphs which the
EU considered to be essential (paragraphs 7-9 of draft
resolution L.24). In the end all of these paragraphs were
retained, albeit in a modified form to satisfy G-77 concerns.
To address the fundamental EU concerns, the final text called
for the General Assembly to review all elements of the
methodology with a view to a decision on the methodology
before the end of the sixty-sixth session. If agreed, the
decision on the methodology would go into effect for the
2013-2015 scale of assessments. This compromise, however, was
unacceptable to Russia and a number of other former Soviet
republics because it did not include the Russian proposal on
exchange rates. These delegations signaled that they would
call for a vote on the Russian proposal when the regular
budget scale resolution came before the Fifth Committee (see
para. 13 below).


12. (SBU) PKO SCALE: MUCH ADO ABOUT THE BAHAMAS AND BAHRAIN:
On the PKO scale, the G-77 remained adamant about the
inclusion of the Bahamas and Bahrain into level C. In
private, both the Bahamas and Bahrain admitted to USUN that
they did not need the 7.5 percent discount associated with
level C but that they could not accept having the current
five members of level C getting a better deal than they were
getting. The U.S. suggested the possibility of providing some
kind of relief to the two countries for three years while the
structure of levels was being reviewed, a proposal that was
reluctantly agreed to by France and the UK. Although some
G-77 experts were initially lukewarm about the proposal,
their tune changed after the U.S. suggested that the G-77
needed to get its act together or it risked having the offer
being withdrawn, as had been threatened by the UK PR. After
intense negotiations on how to provide this relief without
setting a precedent, a compromise was reached by which both
the Bahamas and Bahrain would technically remain in level B
but would be treated as if they were members of level C and
provided with the associated 7.5 percent discount for the
2010-2012 scale period. However, it was agreed that this
arrangement would not be implemented as part of the PKO scale
resolution but rather as a decision of the GA to be reflected
by official statements on the record by both the Chairman and
the PGA as well as in a letter to be circulated by the PGA.
(Note: this letter was sent to Member States on 6 January

2010. End note)

ADOPTING THE COMPROMISE


--------------


13. (U) RUSSIA AND OTHERS BREAK CONSENSUS ON REGULAR BUDGET
SCALE: It was not until shortly before midnight that the
figurative "white smoke" appeared and the PR conclave finally
reached agreement on the two scales of assessments. The Fifth
Committee convened formally at 1:00 AM to approve all pending
draft resolutions, including the two draft resolutions on the
scales of assessments. On the regular budget scale, the
Russian delegation submitted its original proposal on
exchange rates as an amendment. Russia had little to show for
a vigorous demarche campaign it conducted in G-77 capitals
during the preceding week, as the amendment was soundly
defeated by a vote of 22 in favor, including China; 85
opposed; and 27 abstentions, including Brazil and India.
Although the regular budget scale resolution was subsequently
adopted in the Committee without a vote, Russia, Ukraine, and
Belarus made statements disassociating themselves from the
consensus and expressing grave concern that the Fifth
Committee had adopted a resolution as fundamental as the
scales of assessment without having first reached a
consensus.


14. (U) CHAIRMAN AND PGA ISSUE STATEMENTS ABOUT THE BAHAMAS
AND BAHRAIN: On the PKO scale, the Chairman of the Fifth
Committee issued a statement, as agreed during the PR
meeting, indicating that the Bahamas and Bahrain would be
treated as level C countries for the scale of assessments for
the period 2010-2012 even though they would technically
remain members of level B. When the General Assembly convened
at 3 AM to adopt, inter alia, the resolutions of the Fifth
Committee, the PGA made a similar statement. Both scales were
adopted by the General Assembly shortly after 4 in the
morning on Christmas Eve.

CONCLUSION
--------------


15. (SBU) USUN achieved all of its principal goals in the
scales of assessments negotiations. On the regular budget, we
maintained the 22 percent ceiling for at least three more
years without having to break ranks with the EU and other
western colleagues. On the PKO scale we successfully thwarted
the G-77 attempt to open level C up to all G-77 members.


16. (SBU) Comment. The EU was very frustrated and unhappy
with its failure once again to change the methodology for the
regular budget scale to reduce its high collective assessment
(some 10 percent higher than its share of world GNI) by
forcing the BRIC to shoulder a greater share of the budget
commensurate with their growing economic strength and
political influence. Since the high EU assessment is the
result of both the LPCIA and ceiling, and because of previous
challenges by both the EU and the G-77 to the ceiling, the
review of the regular budget scale methodology is likely to
examine the ceiling in some form. Regarding the PKO scale,
the G-77 remains committed to establishing level C as the
highest level for developing countries but are prepared to
consider alternatives based on the review of the structure of
assessment levels. The question remains how the U.S. will
address both of these reviews and what decisions will
confront the GA on the two scales. End comment.
RICE